There's more to investing than just absorbing the latest earnings reports or analyzing financial data—money management also involves human emotions, says behavioral finance expert Lynn Mander. Jean talks to Lynn about the differences between men and women when it comes to investing. Lynn says investing mentalities are built on emotions that go back to the days of the caveman, when males protected their families and guarded their possessions and females raised children and nurtured their families.
As a result, Lynn says men tend to be overconfident with decision-making whereas women require more time to consider similar situations. She says these inherent differences in men and women affect our decision making with money in today's age, too. Recognizing these hard-wired mental tendencies can improve the odds of making smart, subjective decisions with your money, Lynn suggests, while ignoring them may explain why some people make investment mistakes.
How can investors, whether male or female, avoid succumbing to "caveman economics"? Lynn says being objective, rather than subjective, is key. With stocks, for example, Lynn suggests staying the course is the most pragmatic approach, rather than jumping in and out of the market. In the investment world, Lynn says, be defensive, know when to take losses and admit when you've made a mistake.